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Date: 05/04/2007

Nomination Facility in Single Deposit Accounts

RBI/2006-2007/310DBOD.No.Leg BC. 75 /09.07.005/2006-07

April
5, 2007

All Scheduled Commercial Banks (excluding RRBs)

Dear
Sir,

Nomination Facility in
Single Deposit Accounts

Please
refer to Para 9 of our Circular
DBOD. No. BC.95/09.07.005/2004-05 dated June 9, 2005 on the above subject
wherein banks were advised to give wide publicity and provide guidance to deposit
account holders on the benefits of nomination facility and the survivorship clause.
We feel that despite the best efforts in this regard, banks might still be opening
single deposit accounts without nomination.

2.
In a case which came up before the Allahabad High Court, the Honourable Court
has observed that "it will be most appropriate that the Reserve Bank of India
issues guidelines to the effect that no Savings Account or Fixed Deposit in single
name be accepted unless name of the nominee is given by the depositors. It will
go a long way to serve the purpose of the innocent widows and children, who are
dragged on long drawn proceedings in the Court for claiming the amount, which
lawfully belongs to them"

3. Keeping
in view the above, banks are advised to generally insist that the person opening
a deposit account makes a nomination. In case the person opening an account declines
to fill in nomination, the bank should explain the advantages of nomination facility.
If the person opening the account still does not want to nominate, the bank should
ask him to give a specific letter to the effect that he does not want to make
a nomination. In case the person opening the account declines to give such a letter,
the bank should record the fact on the account opening form and proceed with opening
of the account if otherwise found eligible. Under no circumstances, a bank should
refuse to open an account solely on the ground that the person opening the account
refused to nominate.

4. Further,
banks may refer to our Circular DBOD.No.BC.15/09.08.004/96-97 dated February 28,
1997 wherein it was advised that the nomination facility could also be extended
in respect of deposits held in the name of a Sole Proprietary Concern. Banks are
also advised to follow the procedure outlined above in respect of deposit accounts
in the name of Sole Proprietary Concern.